Stocks took advantage of a few surprises Thursday as the market tacked on more to its recent gains.
The Nasdaq led the parade with a 3.8% spike that put it up for the year. The Dow and S&P 500 followed with 2.3% gains. The NYSE composite rose 2%.
Consider the following chart:
Since early March the market has rallied over 20%. Yet -- for some strange reason -- the right wings blogs who professed doom at every opportunity then the market was dropping are now silent. Little Green Footballs -- who posted daily articles on the dow dropping -- has yet to comment on this rally. John Hawkins of Right Wing News -- who wrote an article titled "Is Obama Trying to Crash the Economy -- has been strangely silent. Powerline -- who are without a doubt economic titans of the highest order -- have not said a word. National Review has yet to comment on this rally -- even though I am sure they are happy to see it. After all, markets are good, right? Larry Kudlow has commented, but had given all the credit to the Federal Reserve:
Right now the big story traces back to the late Milton Friedman: Pour in the money and the economy will expand. There's too much money chasing too few goods today, but there will be a stronger-than-expected pickup in the future production of goods and services. Money matters.
This is incredibly funny because the exact same argument applies to the 2001 -- 2007 expansion when the Fed lowered rates to 0% after adjusting for inflation. Only then Kudlow argued "the Greatest Story Never Told" was the result of tax cuts.
Here's the point: there are a host of right wing yahoos who at every turn talked about the market dropping over the last few months. Yet none have said anything about the rally. The reason is simple: they know squat about how the market works. One commenter to a previous story went so far as to blame the then latest drop entirely on Obama but failed to perform the same analysis on the 2007-2008 drop because "Bush did too good a job healing the economy". Talk about mental gymnastics.
The market was dropping because the economic fundamentals were terrible; all the news was uniformly bad. But the market became technically oversold (actually the market became extremely oversold). And then the market heard about a new bail-out plan that it liked followed by some news that wasn't as bad as we thought it would be. And we get a nice rally as a result. Yet now the "Dow as the barometer of the economy" method of economic analysis is no longer valid for some strange reason.
So to the right wing blogs, yahoos and commentators who think the Dow is the ultimate arbiter of the economy, what say you now?